Calculate The Interest Rate And Premium Amount Of RD Using RD Interest Calculator

Sep 22, 2017Lindsey KimFinanceComments Off on Calculate The Interest Rate And Premium Amount Of RD Using RD Interest Calculator

Why Use RD Interest Calculators

Using a Recurring Deposit Interest Calculator or an RD Interest Calculator can lead to a painless experience when calculating one’s returns after a given period of time. The basic idea behind a Recurring Deposit is the principle of compound interest. In India, contrary to popular belief, RDs do not compound the interest monthly. Instead, it is done quarterly over the given time period. So, for an RD of two years, the interest is compounded six times. RD calculators are a short way of getting the exact figures without having to know the complicated mathematics involved.

The Background Details

Say that an individual deposits one hundred rupees in his RD account. In the first quarter, he deposits a total of four hundred rupees. Suppose that the interest on one hundred rupees is seven rupees. Then, after four months, the individual ends up with four hundred and twenty-eight rupees. In the next quarter, he deposits another four hundred.

So, the interest is calculated on the total amount deposited plus the previous quarter’s interest, that is, on eight hundred and twenty-eight. So instead of interest on eight hundred rupees, the individual receives interest on eight hundred and twenty-eight and so on and so forth. A RD Interest calculator is programmed to automatically calculate the amount and much more.

It is possible to calculate the monthly premium, the time of investment, the amount due, and the interest rate as long as any three are provided using an RD Interest calculator. It is all completely automated and requires very little effort from the user. It eliminates all the elaborate calculations to be made and delivers a result within a fraction of a second.

How to Use RD Interest Calculators

A simple RD interest calculator allows the user to input the basic details required to calculate. If the user needs to know how much to deposit per month in order to reach a certain goal they need to input three details. The number of years that he wants to invest, the rate of return per year, and the goal that he intends to meet in the stipulated time. It is as simple as that. The calculator calculates the monthly premium to be paid on its own. Suppose that an investor knows how much they want to invest in order to get a certain sum of money. If they enter those amounts, the RD Interest calculator asks for the expected rate of interest and comes up with the total time required to meet the investment goal organically.

There are also occasions where the user knows what his due amount is, and wants to calculate the rate of interest being paid. The RD Interest calculator just needs the due amount, the monthly premium, and the total time period of investment. It is also most commonly used to find out the amount due for a certain monthly premium made over some given time at a known rate of interest. All these things can be achieved quickly and easily by the pre-programmed calculator. The best thing is that there are many variants of such calculators available online and they take no knowledge of either banking or programming to operate. In fact, even a ten-year-old could use one.